I recently surveyed 1,500 NTMA (National Tooling and Machining Association) machine shop owners about the biggest challenges they face when trying to schedule their shop. And then I spent countless hours going through the data.

I learned a lot and I really felt your pain. But by sharing my findings with you, my hope, is that you will learn a lot as well and maybe we can ease some of that pain.

The 9 Biggest Challenges …

Based on my survey (and from many of my clients and those I meet while Dr. Eliyahu Goldratt’s Global Marketing Director) I can say this… you are not alone. With all the responses I received, I could categorize ALL of them into 9 challenges. So let’s go through each category …

1. Clients change their mind

Customers often want to make changes after they have placed their order. They want to change their quantity, change the scope, change the design, cancel, or ask you to give priority to another one of the jobs.

In addition, customers often have emergency needs. And big or important customers always seem to pick the time when you’re booked solid for 3 weeks to call and request that you slip their job in this week so that they can meet a commitment to their customer.

So, we break a setup, we jump through hoops and do what we need to do to keep the customer happy. But we are now late on another customer’s job. And now the schedule is out of date.

And sometimes, they don’t want to make a change, but they want to check in with you to make sure your going to finish their job on-time.

And, we hate answering the phone.

2. Vendors are not always reliable

Raw material suppliers, particularly for less common materials, can extend or vary their lead-times and then still don’t always deliver when promised.

In addition, outside process vendors like platers, heat-treaters, welders, and the like also have a hard time meeting their original commitment. And the amount of time they end up taking varies based on the load on their facility so you can’t even begin to predict.

So as soon as one of our vendors misses their commitment, our schedule is out of date, and we now may be late. And when it finally shows up, we find ourselves breaking a setup and expediting because THAT customer just called.

And, these guys seem to schedule based on who’s screaming the loudest, so we need to call and scream on a regular basis for any important jobs. This isn’t very productive work, but it’s necessary.

3. Our mix can vary wildly and so our constraint moves

It seems that the nature of a machine shop is that your mix is going to change, and due to that your constraint (your Herbie) is going to move. And, it’s hard to improve a moving target and improving everywhere is just plain unaffordable.

Machine shops can range in the amount of repeat work they do. And the more custom work they do, the more the mix can change day-to-day or week-to-week. And sometimes “the mix gods” are good to us, but sometimes they’re not and we don’t ship on-time.

But shops that do a large amount of repeat or make to stock work don’t have it any easier — they are trying to balance against an unknown and ever changing forecast. And when the forecast is wrong, we need to break setups and expedite.

4. My employees do not always have the right skill and their discipline is lacking

Machine shops universally seem to lack skills amongst their employees. Certain people have to run certain jobs. Not everyone can do a setup, or not everyone can do certain setups. I’ve heard some owners refer to their less skilled labor as button pushers or part changers.

This means that the skilled people always have a backlog of work while we chase around and find something the button pushers can’t screw up. And finding the time to cross train is difficult.

And in addition to these skill issues, people don’t always show up on time or at all. Or they show up, but you wish their attitude would have stayed home…getting buy-in is difficult at best.

5. My processes are not reliable

Even jobs that repeat can have large differences in set up and run times depending on who is running it or what machine it runs on. But even if we can get the same guy and the same machine each time, stuff happens — tools break, fixtures don’t work, machines or tools aren’t calibrated, etc.

And then we win a new job, one we have not run before. And, of course, it doesn’t run anything like what we planned or based our pricing on. Stuff happens.

Our front office or pre-manufacturing processes are not much better. This means that some of the time we don’t always have what we need to run the job — the raw material, the design, the order into the system, the programming done, etc.

And when stuff happens (or more correctly when variability happens) we are in jeopardy of delivering late, which causes us to expedite, which means our schedule is out of date.

6. Machines break down

Of course, on occasion, machines break down. It’s difficult to schedule maintenance when you’re always behind schedule. And it seems to happen when we’re slammed. And then our schedule is out of date, we are in jeopardy of delivering later, and so we again expedite. (We’re getting pretty good at this fire fighting and expediting.)

7. Quality is not near perfect

Quality isn’t always perfect. Sometimes we struggle to make it right the first time or don’t catch a mistake until further processing has been done. Regardless of whether we spend time doing rework due to an unpredictable downstream activity or an unsuccessful tool tryout the result is we are in jeopardy of missing our due date, which causes us to expedite, and now the schedule is out of date.

8. Our data is not readily available nor accurate nor communicated

It is difficult to predict the load on our facility relative to our capacity — our reports and existing software don’t help or they are more trouble than they are worth. Our estimates for set-up and job run times are not accurate. This combined with all the items above make it difficult to provide due dates that we can hit 99+% of the time.

And because so many things can go wrong at any time, and we don’t have good feedback data or communication within the shop — we can’t predict. We can’t predict when we are going to complete a job, if we’re going to be late, so we end up breaking set-ups and expediting when we really need to.

And if we try to improve our due-date performance (DDP) by extending lead-times, we start to lose work to the competition. And if we miss too many due-dates or by too much, we are in danger of losing the client anyway.

So we do what we can. We use the reports we have which are based on less than perfect data. We create a detailed shop schedule, and then we update it, and update it, and update it …

9. Communication between silos is difficult

When something goes wrong within our company or with one of our vendors we don’t always know right way. Real-time feedback is non-existent. And customers don’t always get back to us in a timely fashion.

We don’t always communicate with our sales people and they don’t always communicate with operations/scheduling. There is usually just a lot of finger pointing back and forth. And a number of people want the ability to change shop priorities.

It’s not that we don’t want to communicate, it’s just that everyone is so busy dealing with all of the stuff above, there’s no time to do yet one more thing. And, who needs the conflict that is likely to occur?

We don’t have a quick snapshot of what we should be focusing on at any particular time. We don’t know what’s in jeopardy of being late, and it’s tough to get a sense of how we’re doing.

The Schedule is DOA …

So now we know why our schedule is Dead On Arrival. Actually when you list out all these challenges it’s really amazing that we do as well as we do.

So it’s no wonder it’s so hard for you to maximize your productivity, achieve 99+% on-time performance and reduce lead-times. But nevertheless, we do try to improve. The problem is that we focus on improving one or a couple of the above challenges and we diminish them some — but we don’t have any substantial impact on our on-time delivery performance or reducing our lead-times.

What if we had a Paradise Plant?

If we have correctly identified all the major causes for the difficulty in managing production, then it means that if we could address each one that the shop would be relatively easy to manage. The schedule would not change, we would not need to expedite, and we could be on-time, all the time.

Do you agree that, if:

1. clients never change their mind, 2. and vendors always supply whatever we ask for, on time, 3. and our mix stayed constant and our constraint did not move, 4. and people are excellently trained and disciplined, 5. and all processes are reliable, 6. and machines never break down, 7. and quality is superb, 8. and data is readily available, accurate, and communicated, 9. and communication is good,

Then:

· Managing production would be a piece of cake?

This seems logical. So I tried it. Now, I could not find a real Paradise Plant, but I did find a simulated one. And I gave the simulator to some very good schedulers. The simulator didn’t think for them, it didn’t make any decisions, it only executed the decisions they made.

The simulator presents a relatively simple operation — considerably fewer resources and products than what you have to manage in your real operation. And there is NO variability or skill issues. All of the challenges listed above are gone.

We went over how the simulator works – how to order material, how to set up a machine, what the orders are, the exact routing’s for each product, exactly how long each process is, etc.

The simulator could be frozen and the participants had as much time as they wanted to carefully plan and execute. They also did a short trial to make sure that they weren’t hindered by the software. This should be a piece of cake right?

What Happened in Paradise?

We asked each participate how they did and what their results were. NONE of the participants shipped all their orders — meaning they were NOT 100% on-time. And it wasn’t because of lack of capacity.

In addition, they reported that their well planned, detailed schedule was only good for about the first 2 days. After that they were running by the seat of their pants making a lot of course corrections.

How can it be that when all the challenges are removed, we are still left with the same 3 undesirable effects /problems?

1. Not all customers’ orders are shipped on time.

2. Original plans have a very limited life or are dead on arrival.

3. There are a lot of course corrections and expediting

This means that the list of challenges we collected are not THE major cause of the above three items because they occurred even after we removed these challenges. So it must be that we have not yet identified the true cause for these negative effects.

SUMMARY

So a better ERP, customers who don’t change their mind, higher skilled labor, a constant constraint, a constant mix, and so on wouldn’t completely solve the 3 problems.

But working on one or a few of these challenges is typically what we do. We hire a Lean consultant to help reduce our set-ups or to better organize our work space — and we do reduce our set-up time and we are better organized, but did we substantially improve our DDP, reduce the number of times we need to break setups or reduce our lead-times? The answer is typically no, not substantially.

Are you familiar with USPS Priority Mail Open and Distribute? For some mailers, Priority Mail Drop Shipping is a well kept secret that they are not aware of, and as a result they are missing out on some great opportunities to improve delivery and reduce costs.

For those of you not familiar with this service, it is technically termed Priority Mail Open and Distribute (PMOD) by the United States Postal Service (R) (USPS). It is a method of drop shipping mail to additional postal entry points using Priority Mail as the shipping method rather than more traditional methods such as truckload, less-than-load (LTL) or air freight. The same service is available using Express Mail Open and Distribute (EMOD), although it is more expensive due to the quicker delivery time (next day service).

Regardless of which level of service is used, Open and Distribute is a pretty smart way to drop ship to entry points with smaller volumes of mail which make the more traditional shipping methods cost prohibitive. It works by entering the mailpieces at their normal postage prices (e.g. Periodicals, Standard, etc.) and then placing those trays or sacks of mail into Priority Mail sacks for delivery to the postal entry point.

By using special sack tags, these Priority Mail sacks are identified to the USPS as containing drop shipped mail, which the USPS then opens and distributes the sacks inside as they would normally be routed. The Priority Mail postage is paid on the weight of the mail inside the PM sack (and tare weight of the sacks/trays inside the PM sack), and essentially replaces the shipping charges that would have been charged by freight carriers if the more traditional shipping methods had been used.

Automate PMOD

In the past, this process was very tedious because this mail had to be manually separated, manually tagged with the PMOD tags, and postage statements were manually generated. Now, however, there are software solutions that allow these functions to be automated to the point that it is much more time and cost effective to use PMOD.

How can mailers take advantage of PMOD? There are three major benefits to using PMOD:

1) If you are experiencing delivery delays to remote or distant locations (e.g. Alaska, Hawaii, Guam, Puerto Rico), or any location for that matter, PMOD can be a great way to shorten the delivery time. Priority Mail has delivery standards of 2-3 days, so the mail gets entered into the postal entry points much more quickly than if the mail was locally entered at the printing plant or letter shop.

2) You can take advantage of drop ship discounts even for entry points with low mailing densities, such as Butte, MT or Fargo, ND.

3) You can mail at the less expensive Standard rates, but get very close to First-Class delivery standards if you use PMOD to drop ship to additional entry points.

Your mailings can be easily analyzed to determine whether PMOD will be beneficial for you to use. Using a Mail.dat file, you can process this file through post-presort Mail.dat management software in a “quick plan” mode. This will allow you to see all the possible drop ship entry points for which your mailing would qualify. You can then go a step further by applying freight charges to the entry points with significant mail volumes. Any entry points with small volumes can then be exported into PMOD software to determine the estimated cost of PMOD shipping.

If you do not have post-presort mail.dat management software, you can ask your printer/mailer to perform these analyses for you, or you can contact a provider of this type of software to request a demo or trial of the software. If you have been hesitant to use PMOD in the past due to implementation concerns, or if you are completely new to PMOD, you owe it to yourself and your company to check out the possibilities of this great USPS program.

Okay, I know. “Important priorities” is redundant. Priorities denote importance. So what is important to you? Ask yourself what your priorities are. Do we think about that very often, or is running around putting out fires the basis of our lives? Is doing as little as possible and being comfortable the basis of our lives to where that is the only priority we have?

Here’s an exercise: Keep track of what you do for a day or a week or a month. It can be a rough accounting. At the end of the day or week, think about what you did and for approximately how long. It might be something like this:

This week, I slept 58 hours, I worked at my job (including getting ready, and traveling to and from the job) 53 hours, I relaxed (or had fun or did nothing-much: aimless television, aimless reading of newspapers, magazines, novels, aimless internet, aimless conversations and socializing, being with friends instead of with family, etc.) for 36 hours, I ate (including preparation and clean-up) for 16 hours, I shopped for two hours, and I’m not sure what I did for the remaining three hours.

If this were your accounting, what would anyone think are your priorities? Sleep is good and making money is important. Eating is necessary. Can’t fault you for that. Then again, do you sleep to live or live to sleep? How late did you sleep in on Saturday and Sunday? 58 hours equates to more than 8 hours per night. Do you do the minimum necessary to get a paycheck or are you always getting better and becoming of more worth to your present and future employers? When it comes to discretionary time, it looks like you don’t care much about accomplishing anything. Your priorities are to be comfortable and relax. That’s about it.

If we don’t set priorities, we have them anyway. Life can show us our priorities or we can show life our priorities.

Someone who has purposeful priorities and takes control of her life instead of letting life drift in the wind might have an accounting something like this:

This week, I slept for 55 hours, I worked at my job (including getting ready, and traveling to and from the job) for 53 hours. Included in this time I spent seven hours improving myself and showing my supervisor that I am doing more than is expected so that I can be promoted and paid more. I relaxed (relaxing reading, television, internet, socializing) for 12 hours. Most of this was pleasant time and fun with my spouse and with my children rather than in isolation and irritation if anyone bothered me. I ate (including preparation and clean-up) for 17 hours. The whole family helped prepare the meals and clean up afterwards, and we talked during meals about school, goals, dreams, accomplishments, and so forth. I shopped for two hours. I spent 10 hours in introspection, spiritual pursuits, general self improvement, becoming expert at skills and talents that interest me, helping to improve the human condition as much as I can, improving our community, and so forth. I spent 10 hours directly with my spouse and with the children, other than having fun and talking to them at dinner, helping with homework, helping them prepare for life, cleaning the house and yard together, etc. I spent six hours in physical exercise. I spent three hours making sure my papers, receipts, finances, books, memories, and so forth are organized.

Did you know you could do so much in a week if you just had and acted on priorities?

If someone were to look at this second accounting, what would they think of your priorities? It looks like you’re trying to improve yourself so that you are always employable and so that you can make good money. You spend time getting to know yourself, improving yourself generally, keeping yourself healthy, and in helping others. Family is obviously important to you, and you certainly understand how important it is to train and help your children and stay in tune with your spouse. Organization so that you can get more out of life is a priority for you.

In this second accounting, even though there was relaxing and having fun, doing nothing or wasting time or being comfortable at the expense of getting better were not seen as priorities.

Priorities help us get the most from our lives. We can accomplish more. We can get further. We can even relax, socialize, and have more fun with priorities. I’ll say it again. Life can show us our priorities or we can show life our priorities.

This week, let’s think about our priorities. Are they a tool we use to get where we should be, or are they something we pay no attention to? Let’s make sure we are going somewhere and that we are using priorities to get there.